Form 16 - How Well Do You Know About Form 16?

Have you just started earning and don't have any idea how to file your taxes? Do you rely on an agent to file your taxes for you? Have you just heard a discussion on Form 16 and want to know what that is?

It is always handy to know more about Form 16 and how to use the form to file your tax returns. mymoneykarma saves you the hassle of searching and tells you all you need to know about Form 16.

What is Form 16?

Form 16 is an agglomerate certificate issued by your employer, describing the TDS that has been deducted from your salary along with other information required to file your income tax return. Form 16 is released once a year before June 15th. It has two components - Part A and Part B. In case you misplace or lose your form, you can obtain a duplicate form from your employer. Your company can either issue you a hard copy of the form, or you can download Form 16 from the company website using your login credentials.

Form 16 A

Form 16 A consists of crucial financial identification of the employee and the employer. The information given in Form 16 A includes:

• TAN & PAN of your employer
• Name and address of your employer
• PAN of the employee
  

Summary of tax deducted from the employee's salary and deposited quarterly, which is certified by the employer.

Your employer issues you a Form 16 by downloading it through the TRACES website. If you have changed jobs more than once in a financial year, each employer will issue their own Form 16. You would need to collate that information when you file your taxes.

Form 16 B

Form 16 B is an annexure to Part A, which specifies the various deductions under the Income Tax Act. It  includes the following information:

• Detailed breakup of your salary
• Deductions allowed under the ITA
• Relief under section 89
  

If you change your job in a financial year, then you need to decide if you want Part B of the Form from both of your employers or just from the previous employer.

Why Do You Need Form 16?

Form 16 is necessary documentation that you need in every walk of life. It is proof of the fact that you diligently pay your income tax regularly.  Apart from this, it is also essential for the following purposes.

• Loans: Most loans, such as home loans and two-wheeler loans, require Form 16 receipts as a part of their documentation.
• Visa processing
• Insurance cover: Many high-end medical and life insurance covers need a copy of your Form 16 for processing your request.

How to Get Form 16?

Every employer provides Form 16 to their employees. You can get yours from your employer. Even if you quit your job, your employer is bound to provide it to you. Unfortunately, this income tax Form 16, cannot be downloaded from anywhere.

Documents Required for Filing ITR - ITR Filing Documents Required

 let's delve into the intricacies of the documents that are necessary for filing your income tax return:
Form-16

Form-16 is one of the essential documents to e-file ITR for a salaried person. The employer issues Form-16 to provide a break-up of the salary paid to you and the amount of TDS deducted on it. It is mandatory for your employer to give your Form-16 to you if he/she has deducted TDS from your salary.

Form-16 consists of Part-A and Part-B:

    Part-A includes the details of the tax deducted by your employer during a financial year along with your PAN information and the TAN of your employer.

    Part-B shows the break-up of your salary structure, listing your allowances, perquisites, and profits.

Three variants of Form-16: A, B, and C

Form 16A: While Form 16 is for salaried individuals and is applicable only to the salary drawn from a full-time employment, Form 16A applies to other sources of income. If TDS has been deducted on the interest received from fixed deposits and recurring deposits during a financial year, then you can ask your bank to issue Form-16A to you. Similarly, if you have earned from freelance projects that have been subjected to TDS deductions, you would have to get Form 16A from the remitter.

Form 16B: Form 16B is applicable to income from the sale of property. In case you have sold your property, then ask the buyer to issue you Form-16B specifying the TDS deducted on the paid amount.

Form 16C: Income from rent is associated with Form 16C. If you are a landlord earning rental income, then ask your tenant to provide Form-16C containing the details of TDS deducted on the rent received by you.
Salary Slips

Your salary slip is contains your salary structure, and it plays a crucial role in determining the components of your salary that are taxable. The union budget in 2018-19 made several changes to the tax rules, including the standard deduction being raised to Rs 40,000 for salaried employees in place of the deductions for medical reimbursements and travel allowance.
Tax-saving Investment Proof

All your tax-saving investments - such as Employee Provident Fund, PPF, Mutual funds, premium paid for life insurance, National Pension Scheme, etc. - and expenditures - such as home loan principal repayment, child's tuition fee, etc. - that you have made under section 80C, 80CCC and 80CCD(1) in a financial year can help in reducing your tax liability.  However, the maximum amount to claim under these three sections cannot exceed Rs 1.5 lakh. You’d be needing document proof for all such investments that you wish to claim.
Form 26AS

It is a consolidated tax passbook that encompasses the information of all the taxes that have been deducted in a financial year such as TDS deducted by the employer, banks, financial institutions, and other organizations, for the payments that you have received.
Deductions under Section 80D - 80U

There are expenses on which you can claim deductions under numerous sections of the Income Tax Act. For instance - health insurance premium paid in a financial year is eligible for a maximum deduction of Rs.25,000 under section 80D of the income tax act. Receipts for all such deductions are required for filing ITR.
Home Loan Statements from Bank or NBFC

If you have an active home loan from a bank or any other financial institution, then don't forget to ask for the loan statement containing the break-up of principal and interest that you are paying. The interest repaid on the home loan can reduce your tax liability to a maximum of Rs.2 lakhs under section 24.
Capital Gains

If you have earned capital gains from property sale or mutual funds or elsewhere, then you should report these gains in your Income Tax Return file attaching the sale deed or statements.
Aadhaar card

As per section 139AA of the Income-tax Act, it is mandatory to provide your aadhaar card details to successfully file your ITR.
Interest Certificates Received from Savings

The interest that you receive on a savings bank account, post office savings account, fixed deposits, and recurring deposits are taxable. Hence, you need the interest certificates from the bank or post office to file your ITR.